WASHINGTON — The Financial Industry Regulatory Authority (FINRA) today announced that the Securities and Exchange Commission (SEC) has approved its proposed rule change to provide customers in all FINRA arbitrations the option of having an all public panel. Historically, in cases with three arbitrators, the panels have been comprised of two public arbitrators and one arbitrator with a nexus to the securities industry. The amended rules will apply to all customer cases in which a list of potential arbitrators has not yet been sent to the parties.

"This change will give investors an additional choice in selecting their arbitrators when they file claims," said Richard Ketchum, FINRA Chairman and Chief Executive Officer. "We believe that giving investors the ability to have an all-public panel will increase public confidence in the fairness of our dispute resolution process."

FINRA sought the SEC's approval for the rule change in October after results of a 27-month pilot program showed that investors presented with this option chose the new method of arbitrator selection nearly 60 percent of the time. Investors regularly accepted a non-public arbitrator, but the ability to choose the circumstances improved their perception of the process. Participation in FINRA's Public Arbitrator Pilot Program was voluntary and ultimately included the participation of 14 firms.

"There was strong support from investor and consumer groups for giving arbitration customers the right to decide whether their panel should include a non-public member," said Ketchum.

FINRA, the Financial Industry Regulatory Authority, is the largest non-governmental regulator for all securities firms doing business in the United States. FINRA is dedicated to investor protection and market integrity through effective and efficient regulation and complementary compliance and technology-based services. FINRA touches virtually every aspect of the securities business - from registering and educating all industry participants to examining securities firms, writing and enforcing rules and the federal securities laws, informing and educating the investing public, providing trade reporting and other industry utilities, and administering the largest dispute resolution forum for investors and registered firms. Currently, there are roughly 6,300 FINRA arbitrators - 3,500 are public and 2,800 are non-public. For more information, please visit www.finra.org.